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A boost to NFC?

Ajit Deshpande - - 0 Comments

In an announcement that is indicative of the increasing relevance of Near Field Communications (NFC) to the smartphone industry, Broadcom last week released a new quad-radio wireless chip that provides support to Wi-Fi, Bluetooth, FM and NFC. This new chip follows Broadcom’s introduction in Sept’11 of a standalone NFC chip for smartphones. The company had projected at the time that roughly about 100 million smartphones with standalone NFC chips would be sold in 2012, a 10-15% share of overall smartphone device sales.

Near-field communication (NFC) technology has been an area of interest in the context of smart devices for more than five years now. The first NFC enabled phone was introduced by Nokia in January 2007, and over the years, more and more new NFC enabled phones have continued to enter the market. Yet, NFC is still a small portion of the handset market, and Broadcom’s new combo chip might just be the fillip NFC needs for greater adoption in handsets. Broadcom is the dominant seller of Wi-Fi/BT/FM combo chips, and to the extent it can control costs on the new quad-combo chip, NFC may now be able to latch on to the proven demand for the other communication standards. More importantly, with second largest combo-chip maker TI already selling an NFC combo chip, there is now enough momentum in the market to make NFC commonplace in handsets in the near future.

Are handsets then enough to create mass-scale adoption for NFC? Vivotech’s recent sale of its contactless reader business suggests that NFC adoption in handsets might at least be a necessary if not sufficient condition for the technology. Also needed is the adoption of large-scale use cases (the primary one being contactless payments) and platforms enabling such use cases (such as mobile wallets, secure elements, and enabling software such as that offered by Opus portfolio company Sequent). So the NFC battle is far from won, but Broadcom’s move, based clearly on ROI, suggests we are still on track.

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